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dbelov275

Forex Trading Vs Stock Trading

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Yes. Forex trading can be very profitable as it carries a substantial amount of risk. What you should always remember is: While high-risk investments can bring you significant gains, they can also bring you tremendous losses.

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Forex trading is much comfortable as you can find learning sources and news sources quite easily. Moreover, it is much more diverse than the stocks as you have plenty of options to trade in with similar behavior. In stocks trading, you have research and keep an eye on every stock!  

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I invested a lot of time looking for profitable traders before getting into the niche. Something around 2-3 weeks of 12+ hours a day just to find somebody whose words I can believe enough to make any conclusions.

I must say that I found profitable and believeable traders in both markets, but stock trading had much more of them. I found just 2 full-time Forex traders whose words I can believe. They don't sell any services or products, they just live from trading of their own accounts. Both of them are tired of trading.

As for the stock market, there are a lot of people sharing their results publically. I found enough to make my own conclusions.

There are also a lot of people who finally moved from future to stocks. It's just more profitable at the end.

While Forex may seem more profitable at the very beginning becauase it's so volatile, the truth is directly opposite. Forex isn't "volatile", stocks are much more volatile by their nature. Forex gives you an illusion of volatility due to insane leverage.

Taking into account average daily range of 0.1%-0.5%, you are trading purely noise. Being a software developer, I created an internal statistical analysis system to build price movement distributions. They are so close to white noise distribution you will be surprised.

As for stocks, movements have clear signals in them. Yes, there is still a lot of noise when you are day trading, but just look at higher timeframes too see the difference.

I would personally prefer stocks, I plan to convert my first product to stock trading simulator in the future. Forex is a good way to learn initial trading experience as long as you trade penny accounts, but I would stay away from it if I decide to get back to trading again.

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I stand corrected.  MaxPastukhov discussed "leverage" and Percentage Change above...

Quote

 

While Forex may seem more profitable at the very beginning becauase it's so volatile, the truth is directly opposite. Forex isn't "volatile", stocks are much more volatile by their nature. Forex gives you an illusion of volatility due to insane leverage.

 

 

Thanks.

 

 

 

btw - MaxPastukhov, re fx and "Taking into account average daily range of 0.1%-0.5%, you are trading purely noise ."

I disagree.   ...  FX price movements are not 'pure noise' ... 'statistically' it may initially appear that way, but FX price movements follow very similar auction(s) patterns and cycles as  other - both high and low Percentage Change - instruments 

 

Edited by zdo
add "leverage" word to first sentence

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Top 5 Differences between forex and stocks

The table below summarizes a few key differences between the forex market and the stock market:

Forex Market                                                                                           

Stock Market

  • Large volume- Around $5 Trillion per day                                
  • Less volume – Roughly $200 billion per day
  • Highly Liquid
  • Less liquid
  • 24 Hour Markets
  • 8 Hour Markets
  • Minimal or no commissions
  • Commissions
  • Narrow Focus
  • Wide Focus

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One of the biggest differences between forex and stocks is the sheer size of the forex market . Forex is estimated to trade around $5 trillion a day, with most trading concentrated on a few major pairs like the EUR/USDUSD/JPYGBP/USD and AUD/USD. The forex market volume dwarfs the dollar volume of all the world’s stock markets combined, which average roughly $200 billion per day.

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A market that trades in high volume generally has high liquidity. ... Forex major pairs typically have extremely low spreads and transactions costs when compared to stocks and this is one of the major advantages of trading the forex market versus trading the stock market.

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